The "Law on undelivered Movable Pledge in Commercial Transactions” No.  6750 has published in the Official Gazette dated 28.10.2016. Accordingly, a new regime similar to immovable pledge under Turkish Civil Law has been accepted for undelivered movable pledges  in commercial transactions.  

According to Law No. 6750, the eligible persons to carry out a undelivered  contract of pledge are mentioned to be as follows:  

  • Credit institutions and traders,
  • Tradesmen, farmers, producers' organizations,
  • Self-employed real and legal persons,
  • Traders and / or tradesmen.  

Within the framework of Law No. 6750; the rights and shared ownership rights related with all kinds of licenses and warrants that are not in the nature of licenses, lease income, tenancy rights, machinery and property rights, industrial property rights, raw materials, animals, all kinds of gains and revenues, stocks, agricultural products, trade name and/or business name, commercial enterprise or trade business, commercial plate and commercial products such as electronic equipments, equipments, tools, machines, lines, commercial projects, wagons, and finally the movable assets of the third party's possession; would be subjected to undelivered movable pledge.

An undelivered movable pledge shall be established, via the signature of a pledge contract in electronic form or in written form. The pledge agreement, which has been executed electronically, shall be registered if only it has been executed with the secure electronic signature, or in case it has been executed in written form the signatures of the parties should be notarized or should be taken in the presence of the registrar.. Thus, the pledge foreseen in the agreement will be legally valid asof the time and date of “registery " and shall be asserted to third parties accordingly.  

The registery of the pledged movables has a great importance as the right of pledge comes into effect and binds the third parties based on the aforementioned process. In addition, this registry will have considerable importance in determining the priority between a number of pledgees. The "degree system" envisaged for the immovable pledge under Turkish law may also be applicable in terms of the movable pledge provided that it is precisely regulated by the contract. As such, the guarantee provided by the pledge shall be limited to the amount and grade of the pledge stated in the registry which shall be similar to the immovables. In case of establishment of more than one pledge right without specifying the rank,  the right of priority shall be determined according to the time which the pledge had been established.  

If a due pledge is not paid, special and new rights have been granted to the creditor within the scope of Law No. 6750. These new rights are likely to create an exception to the principle of "Prohibition to acquire a Pledged property (Lex. Commisoria)”, which is one of the dominant principles of Turkish and continental pledge law.

Accordingly, in case the the due debt is not paid, the creditor is allowed to:  

  • To demand the transfer of ownership of the pledged movable property in case he is a first-degree creditor,
  • Transfer the receivable to asset management companies,
  • Use the rental and license rights on the assets which do not demand the transfer of possession.  

There are also various secuirities for the pledgee, which shall be imposed on pledger or those who take over the pledged movable (from the pledger). Accordingly, the pledger or the person who has taken over the pledged movable will be sentenced to administrative fine of not more than the half of debt amount under guarantee in case:  

  • Useage of the pledged against the Law No. 6750,
  • Not to transfer the ownership of pledged in case of non-payment of the debt,
  • To destroy or ruin the pledged asset in order to cause damage to the creditor,
  • Not to register the pledged movable and debt in the Registry Office,
  • To act in order to mislead the Registry.  

If the pledgee permanently pledges a movable property and implements a business such as borrowing money on a continuous basis, the pledgee will be penalized on the basis of "usury" as foreseen under 241 of the Turkish Penal Code.  

According to the law No. 6750, in order to terminate the pledge recorded in the registry of the pledged movables, the creditor should apply within 3 business days following the cease of the debt and thereby powered to demand the release from the registry. Any pledge creditor who fails to apply within the time specified shall be sentenced to 1/10 of the amount of the secured amount.  

As a result, Law No. 6750, which regulates undeliverable pledges in commercial transactions, includes exceptional regulations in many respects. With the enactment of the Law, a general register of movable pledge has been foreseen to be established, new administrative and criminal sanctions has been foreseen to be imposed on the pledger and the pledgee, the major change that can be deemed as an exception to the "prohibition of the acquisition of pledged movable" under Turkish Law will be effective asof the new year. Finally, we can state that the Commercial Business Pledges in accordance with the provisions of Law No. 6750 via repealing the Commercial Business Pledge Law no. 1447 reveals a new regime.